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| Uneventful Rally. Retail Sales on Deck | Mon, 15 Sep 2025 19:47:02 GMT
| | Uneventful Rally. Retail Sales on Deck
Bonds began the week on a stronger note, but not for any glaringly obvious reasons. The same was said about Friday's weakness, so perhaps we'll just call it a wash and assume that traders are getting into (or out of) position(s) ahead of this week's Fed Day. Thus morning's NY Fed Manufacturing data fit the rally narrative, but most of the gains were in place beforehand--not to mention the limited track record of impact from that report. Volumes were exceptionally light and volatility was exceptionally low after the initial gains in the AM. Tuesday's Retail Sales data is more capable of moving the needle.
Econ Data / Events
NY Fed Manufacturing
-8.7 vs +5.0 f'cast, 11.9 prev
Market Movement Recap
10:50 AM Flat overnight with early, modest gains. MBS up 3 ticks (.09) and 10yr down 2.3bps at 4.043
02:29 PM Steady gains. MBS up 6 ticks (.19) and 10yr down 3.4bps at 4.033
03:46 PM Boring and green. MBS still up 6 ticks (.19) and 10yr down 2.6bps at 4.04 |
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| Mortgage Rates Start Week at Another Long-Term Low | Mon, 15 Sep 2025 19:12:00 GMT
| | Mortgage rates have done almost nothing but move lower over the past 4 months. The first Fridays in August and September account for about half of the total drop thanks to weaker results in the jobs report. Since the September 5th jobs report, rates have held a sideways-to-slightly lower range that's resulted in several additional "lowest since" headlines. There's nothing special about today in that regard. Bonds (which dictate rates) happened to improve, so rates inched to another 11+ month low. Today's levels aren't appreciably different than last Friday's. Volatility is a bigger risk over the next two days thanks to economic data tomorrow morning and the Fed announcement on Wednesday. |
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| Insurance Co. Investor, UAD 3.6, RON, Personal Branding Tools; TPO Product; Disaster News | Mon, 15 Sep 2025 15:53:53 GMT
| | “Someone posted that they had just made synonym buns. I replied, ‘You mean just like the ones that grammar used to make?’ I am now blocked.” That was sent to me by an economist; yes, they have senses of humor. Did you know that the Federal Reserve Board employs more than 500 researchers, including more than 400 Ph.D. economists, who represent an exceptionally diverse range of interests and specific areas of expertise? (I wonder if anyone yells, “Is there a doctor in the house?” at staff meetings.) This week’s focus will be almost entirely on the Federal Reserve. The central bank's monetary policy committee will deliver its seventh interest rate decision of the year on Wednesday. The Fed has stubbornly held interest rates steady since ending 2024 with a series of cuts, but now with the labor market showing continued signs of cooling and inflation remaining sticky, it is a sure thing that the central bank will restart its policy easing process and drop overnight Fed Funds by 25 basis points, which in turn should move the discount rate lower (the rate at which the Federal Reserve lends money to financial institutions, including commercial banks, thrifts and credit unions). (Today’s podcast can be found here and this week’s are sponsored by CreditXpert. The all-new credit optimization platform that helps you close more loans. CreditXpert is committed to making homeownership more accessible and affordable for ALL. Today’s features an interview with Potomac Consulting’s Dan Varroney on why the Federal Reserve should cut rates 50-basis points this week due to weakening labor markets and recent inflation data.) |
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| Slow, Slightly Stronger Start to a Potentially Volatile Week | Mon, 15 Sep 2025 15:25:00 GMT
| | For all the time we spend pushing back on the notion that the Fed Funds Rate is a root cause for volatility in longer-term rates, that push-back always carries a notable caveat: Fed Funds Rate expectations definitely have a direct correlation with longer-term rates.
There are two reasons those expectations can change: markets are either assuming the change due to economic data or markets are reacting to a change in the Fed's reaction function. Fed speeches and especially the quarterly dot plot (a summary of each Fed member's base case rate expectations) account for changes in the reaction function.
This is why the dot plot can be such a big market mover. It also causes volatility because the market spends 3 months trying to get inside the Fed's head and the dots let the market know how good of a job they did.
Bottom line: with a fairly big shift in labor market metrics over the past 3 months, Wednesday afternoon's dot plot is this week's focal point for potential volatility.
Bonds are starting the week slightly stronger after holding fairly steady in the overnight session. |
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| Incidental, Inconsequential Weakness Ahead of Fed Week | Fri, 12 Sep 2025 19:43:26 GMT
| | Incidental, Inconsequential Weakness Ahead of Fed Week
Bonds began the day in modestly weaker territory and yields are heading out right where they started. In fact, yields are also right in line with the opening levels from Monday. This broadly suggests the market got where it was going after the jobs report and is now waiting for the next big shoe to drop. The other way to view this entire week is as an opportunity to book profits and cover shorts on the recent "steepening" trade (which favored buying 2s over 10s). Indeed, 2yr yields mostly sold off this week relative to 10s and today was the only real exception. Either way, there was no concrete cause and effect in the news or econ calendar, so chalk it up to "position squaring ahead of next week's Fed day."
Econ Data / Events
Consumer Sentiment
55.4 vs 58.0 f'cast, 58.2 prev
1yr inflation expectations
unchanged
5yr inflation expectations
3.9 vs 3.5 previously
Market Movement Recap
10:41 AM moderately weaker overnight and holding mostly sideways so far. MBS roughly unchanged and 10yr up 3.8bps at 4.063
02:18 PM Holding sideways all day. MBS up 1 tick (.03) and 10yr up 3.9bps at 4.065
03:41 PM Heading out with 10s up 3.3bps at 4.059 and MBS still up 1 tick (.03). |
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| Mortgage Rates Were Flat All Week No Matter What Other News Suggests | Fri, 12 Sep 2025 19:20:00 GMT
| | The underlying bond market (which dictates the rates offered by mortgage lenders) weakened moderately overnight. Weaker bonds equate to higher rates, all else equal. "Higher rates" is contrary to many media outlets' coverage this week, but there's an important reason. Most news organizations that cover mortgage rates rely on Freddie Mac's weekly rate survey for their once-a-week update. Additionally, when Freddie's rate raises/falls appreciably, it receives even more attention. This frequently creates problems due to the timing and methodology of Freddie's survey. Specifically, the survey is an AVERAGE of the rates seen over the 5 days (Thu-Wed) leading up to Freddie's Thursday release. As such, if rates happen to fall sharply on a Friday (as was the case last week), our DAILY rate tracking will reflect that on Friday while Freddie won't catch up until the following Thursday (yesterday, in this case). By that time, rates hadn't moved any lower, and now today, they're actually a bit higher. All that to say, the rate drop you're hearing about from Freddie is the same rate drop we told you about last Friday. There's been no meaningful improvement since then, and in fact, a modest increase in rates today. Today's move in bonds/rates wasn't driven by anything specific and shifts of this size don't demand concrete justification in underlying data or events. It could simply be the case that traders were closing out trading positions for the week and the modest uptick in yields/rates was the incidental result. |
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| 2nd, Database Mining, Manufactured Housing Products; Weak Job Market Impacting Rates? | Fri, 12 Sep 2025 15:38:35 GMT
| | “Rob, we’ve said ‘no’ to more expansion possibilities than ever before. Are you hearing other lenders doing deep dives on LOs and branches and also not seeing a profitable path?” Yes indeedy. Here in Jackson, MS, at the Mississippi Mortgage Banker’s Fall Conference, lenders are not only discussing expansion but also early payoff penalties and strategies to avoid them. (Of course, they are explaining to newer entrants why few investors would ever pay 102 or 104 for a loan that may pay off soon at 100.) One topic is why companies service, or sell service, and this month’s STRATMOR piece is titled, “Servicing: What’s All the Fuss About?” Another topic on lenders’ minds are demographics, income, and reasons for moving, and now we have government news that income inequality has dipped and fewer people moved, per the largest survey of U.S. life. Talk to any solid loan originator, and they’ll tell you that the top three attributes of their brethren are focus, leadership, and consistency. (Today’s podcast can be found here and this week’s are sponsored by Indecomm. Streamlining operations with the genius blend of automation, AI, and services. Achieve practical digital transformation and real operational impact with Indecomm’s purpose-built mortgage solutions. Hear an interview with Polunsky Beitel Green’s Peter Idziak on takeaways from the bipartisan Home Buyers Privacy Protection Act (trigger leads bill), which amends the Fair Credit Reporting Act by shifting trigger leads to an opt-in system, mandates a study on text-based solicitations, and raises concerns about its impact on credit bureau revenue and market competition.) |
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| Back in The Range After Failed Breakout Attempt | Fri, 12 Sep 2025 15:11:56 GMT
| | Bonds began the week with 10yr at 4.07 before rallying down to 4.04 by Monday's close. Now on Friday, we're opening at 4.06 and we haven't spent much time trading more than a few bps higher or lower than that for the entire week. Translation: apart from yesterday's attempt to challenge the 4.0% floor, it's been very sideways and uneventful. On the topic of the 4.0% floor, market technicians might be reading some significance into the repeated bounces yesterday amid higher volumes. But one need not be a technician to reconcile the mixed econ data and broad uncertainty with an unwillingness to push an already well-developed post-NFP rally. Bonds will wait for the dot plot before considering the possibility of a true range departure (barring unforeseen shocks, as always).
In other news, MBS are outperforming due to dynamics surrounding "the roll" (monthly settlement process that brings a new coupon to the forefront). The chart makes it look like MBS are lower so far today, but when comparing October delivery coupons to themselves, MBS are actually flat instead of weaker (the 2-day chart shows October coupons today and September coupons yesterday). |
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| Very Calm Reaction But Not Too Surprising | Thu, 11 Sep 2025 20:25:56 GMT
| | Very Calm Reaction But Not Too Surprising
One could argue that CPI is the next biggest potential market mover after the jobs report. With that in mind, it might seem surprising that MBS are heading out the door roughly unchanged and 10yr yields are down less than 3bps. It becomes less surprising when we consider inflation was mostly in line with expectations. Elevated unrounded core numbers were offset by decent drop in supercore (services excluding energy and shelter). When it comes to this morning's initial rally, we'd give more credit to supercore than we would to the pop in Jobless Claims, but both probably played a role. Either way, all today's CPI really needed to do was stay out of the way of rate cut signals in the last jobs report, and it generally did.
Econ Data / Events
Continued Claims (Aug)/30
1,939K vs 1950K f'cast, 1940K prev
Continued Claims (Aug)/30
1,939K vs 1950K f'cast, 1940K prev
Jobless Claims (Sep)/06
263K vs 235K f'cast, 237K prev
Jobless Claims (Sep)/06
263K vs 235K f'cast, 237K prev
m/m CORE CPI (Aug)
0.3% vs 0.3% f'cast, 0.3% prev
m/m CORE CPI (Aug)
0.3% vs 0.3% f'cast, 0.3% prev
m/m Headline CPI (Aug)
0.4% vs 0.3% f'cast, 0.2% prev
m/m Headline CPI (Aug)
0.4% vs 0.3% f'cast, 0.2% prev
y/y CORE CPI (Aug)
3.1% vs 3.1% f'cast, 3.1% prev
y/y CORE CPI (Aug)
3.1% vs 3.1% f'cast, 3.1% prev
y/y Headline CPI (Aug)
2.9% vs 2.9% f'cast, 2.7% prev
y/y Headline CPI (Aug)
2.9% vs 2.9% f'cast, 2.7% prev
Market Movement Recap
08:46 AM Initially stronger after data, but pulling back a bit. MBS roughly unchanged and 10yr down 1.7bps at 4.032
02:03 PM Holding modest gains. MBS up 2 ticks (.06) and 10yr down 3.2bps at 4.017
04:05 PM Fairly flat, but near weaker levels of the past few hours. MBS up only 1 tick (.03) and 10yr down 2.9bps at 4.02 |
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| Mortgage Rates Move Back to Long-Term Lows | Thu, 11 Sep 2025 19:51:00 GMT
| | Today's inflation report (the Consumer Price Index or CPI) certainly had a chance to create volatility for rates, but things ended up staying fairly calm. There are multiple subheadings of data that the bond market cares about when it come to CPI. Most of them were in line with expectations, or close enough to avoid surprising investors. The absence of surprise gave way to some improvement in bonds which, in turn, allowed mortgage lenders to start the day at just slightly lower levels. Additionally, a higher reading in this morning's weekly jobless claims report may have helped. Officially, the top tier 30yr fixed rate at the average lender just barely scratched out a new 11-month low, but most borrowers would see little--if any--difference compared to the past 4 days. |
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